Landlords keep cranking up rents, rent inflation Jun 21, 2015 9:47:00 GMT -6
Post by jeffolie on Jun 21, 2015 9:47:00 GMT -6
WASHINGTON (MarketWatch)—Landlords keep cranking up rents, with annual increases far outpacing price growth elsewhere in the economy, according to data released Thursday.
Rents in May were up 3.5% from a year earlier, while a gauge for overall consumer prices showed no growth, the U.S. Labor Department reported.
Rent and other shelter costs make up a substantial chunk of a consumer’s budget, and pulled up expenses over the past year. Offsetting that inflation, prices for gasoline and other energy plunged in the past 12 months. Meanwhile, prices for food rose 1.6% over the year through May, while clothing costs dropped 1.5%.
Annual inflation for rents has been running faster than overall consumer-price growth for three years. Many U.S. families are unwilling or unable to buy a home, plunging homeownership to the lowest rate in a quarter of a century and giving landlords pricing power.
California has several markets with particularly fast rent growth, such as Oakland, Sacramento, San Jose, San Francisco and Riverside, according to Axiometrics, a Dallas-based firm that specializes in apartment and student-housing analysis. Several other areas with relatively speedy rent growth are Portland, Denver and Seattle. These cities all have an apartment-occupancy rate above the national average.
Rising rents are squeezing already-strapped individuals and families.
“Not a single county in the United States has enough affordable housing for all its extremely low-income renters,” according to a new report from the Urban Institute, a Washington-based think tank.
Developers, seeing an opportunity, have ramped up their plans to construct apartments. But it will take time for units to become available, and, meanwhile, landlords will be able to keep rents high.
The good news for renters and workers generally is that there are signs that wage growth is starting to pick up, as Federal Reserve Chairwoman Janet Yellen noted Wednesday. A stronger labor market that pumps up workers’ income should help apartment dwellers afford higher rent costs. An economy that consistently adds a healthy numbers of jobs each month should also help more families afford to buy a home, easing some apartment demand and cutting upward pressure on rent prices.